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Farrer & Co | Managing Reputations Through the Weinstein Wreckage

Very occasionally we witness the extraordinary unravelling of an individual or company reputation from which there is simply no return. Common features include: that events are completely unpredictable (at least from the outside); they invariably stem from a cultural falling which may be many years in the making; there is a failure in leadership and the downward spiral, once it begins, is almost breath-taking in its speed.

The fall and fall of Harvey Weinstein is just such a case. Although no judge or jury has handed down a verdict, the court of public opinion has done so for him. Any idea of redemption or second chances, for which he has pleaded, are wild pipe dreams. Indeed, the fall may well still have much further to go with the real prospect of criminal and civil proceedings.

So much for Weinstein, but what about the other players in this drama: the numerous alleged victims; his wife Georgina Chapman who has left him and who has her own luxury business, Marchesa, which now runs the risk of being tainted by the scandal; and Miramax and Weinstein Co, the film production companies co-founded and fronted by Weinstein?

The Victims

Tinseltown has, understandably, gone into meltdown in the past couple of weeks as it asks itself the questions, how could this apparently have gone on for so long without becoming public; and does this one man’s misconduct represent a wider industry malaise of women being abused by all-powerful, male film executives?

Without question, a key factor is the dilemma any victim faces in deciding whether to keep quiet or to take some action. Those actresses, especially the likes of Ashley Judd and Rose McGowan who ‘broke cover’, have been described as brave, and quite rightly. It is an entirely rational decision for any actress to decide to keep quiet, however harrowing the experience. Not only does the equation involve the extent to which their work prospects may deteriorate, but the very nature of allegations being so personal has its own ramifications. Would every victim wish to make the facts public, given the sensitive nature and risk of public embarrassment if not humiliation? Quite understandably, not, in many a case.

Equally, going public may have ramifications for them privately. Other halves and family members may question the veracity of the incident being non-consensual. They will have to also weigh up the extent to which they would be believed. Did they wish to pit their word against the great movie mogul, Weinstein? Of course, Weinstein would have been aware of these factors too.

But, having outed Weinstein, surely now these women have fewer concerns. For some, that may be the case, especially those who felt able to escape his attentions. However, that’s not to say some of them run the risk of being unofficially blackballed by the industry as being trouble-makers. This is not beyond all realms of possibility, notwithstanding the outpouring of support they have received. How many other studios and film companies have been quick to get on the stump in their support?

Of course, having made public their allegations, they now face being asked by the police to give evidence. The mere fact of going through the process of giving their account could be traumatic. Then there is the prospect of court proceedings and giving evidence. It’s easy to imagine: “So Ms X, when you say you were assaulted in 2003 and felt utterly reviled as a result, why have you been photographed on numerous occasions since then draped all over Mr W? Isn’t this a convenient opportunity to revitalise your flagging career?”. How many would want to put themselves through the mill of giving evidence?

None of this should be thought of as easy. It will have been these difficulties that will have kept many women quiet for years.
 
Georgina Chapman

Weinstein’s now estranged English born wife of ten years, Georgina Chapman, has also been placed in an extremely difficult position. On the assumption she had no idea about Weinstein’s alleged proclivities, she is very much a victim. As well as her own personal position, she has her Marchesa fashion brand that is at serious risk of suffering very substantial damage due to guilt by way of association. This recognises the toxicity of the allegations levelled against her husband.
 
As much as Ms Chapman’s decision to distance herself is entirely understandable on a personal level, this is also very much the first step to insulate her business from the fall-out of Weinstein’s actions. For the foreseeable future there will need to be some careful management and planning to protect both Ms Chapman and the Marchesa brand from being irreparably damaged. While achievable, this will take a concerted effort, even though many will seek to rally around them both.

Miramax & Weinstein Co

Miramax has been, in recent years, the standout name in film production, with two of its early successes being, ironically, Scandal, Sex, Lies and Videotapes. Weinstein has been fired by the Miramax board, which includes his brother Bob. There was, of course, no other realistic option for the company if it was to have any hope of protecting itself and its shareholder’s investment.

At the time of writing, Weinstein Co has announced it is looking for a buyer, no doubt as a result of facing pressure from investors for it to be sold although closure is its other real alternative. Of course, any sale will be a fire sale due to recognition of the brand’s decimation caused by one of its co-founders.

The damage done to Weinstein Co, if not Miramax, replicates the wiping out of Bell Pottinger, the London based communications firm, earlier this autumn when its brand and value were reduced to rubble as the result of its own corporate scandal.  Frankly, it will be close to miraculous if the company can be rescued.

Not only is the association with Weinstein the reason for this, but other questions remain. It is reported that there have been as many as eight settlements in respect of allegations made previously about Weinstein’s conduct. The exact truth is probably still to emerge, but who in the Weinstein companies knew what and when are going to be uncomfortable issues that still need to be confronted. If others in the organisations – notably senior executives - had knowledge of allegations, turned a blind eye (potentially repeatedly) and/or swept previous complaints under the carpet, this draws in others as being potentially conspiratorial. It would also add further evidence to the case against the industry more generally.

As things stand presently, the implication is that here was a man deemed too big to challenge; too big to fail. As we know to be trite, absolute power corrupts absolutely. The senior executives and board members that have sat alongside Weinstein have some serious soul-searching and explaining to do so as to demonstrate that, both as individuals and the companies generally, they should not share some of the blame for Weinstein’s actions going unchecked for such a lengthy period of time. The future of both companies may very well rest on not just what was known in the past, but also how they deal with the problem now. Any suggestion of a lack of transparency, evasiveness, or misunderstanding of the gravity of the situation could potentially be terminable.
 
The Weinstein story has some considerable distance to play out. Whatever happens to Weinstein may be of no concern to most - whatever comes his way is likely to be deserved. However, the impact on those affected by his actions is an aspect of this crisis that should be of profound interest and, as appropriate, sympathy. They will need to think carefully about how they manage themselves and their organisations through the foreseeable future. The actresses involved and Ms Chapman deserve to be well-shielded. Whether the same can be said of those within Miramax and Weinstein Co remains to be seen.

If you require further information on anything covered in this briefing please contact Julian Pike or your usual contact at the firm on 020 3375 7000. Further information can also be found on the Reputation Management page on our website.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, October 2017

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